👀 A cryptic confusion!- Cryptocurrency

Crypto, ESOPs and Dividend Income Tax

Crypto is now legal… On March 4, 2020, the Supreme Court struck down the ban on cryptocurrency trading as notified by the RBI on Feb 2018. However, many will argue that India still requires a solid legal framework to support cryptocurrency trading… and sure enough, there’s a long way to go!!

Curious Case of ESOPs… In what many termed as a great boost for the Indian Startup Ecosystem, FinMin announced a deferment based tax treatment for ESOPs. Nearly 29,000 startups could benefit from the announcement. But we’re still not there yet. Looks like India could learn a thing or two (like exempting tax on ESOPs or taxing on the basis of the nature of capital gain) from USA, China, and Singapore.

Dividend Income Tax to be halved?… Word on the street is that FinMin could soon announce reduced Dividend Income Tax by half!! This could very much level the playing field for HNIs and FIIs and address the preferential treatment by the Government.

Advance Tax deadline is right around the corner… Advance Tax is a ‘pay-as-you-earn’ scheme for collecting taxes in advance. The deadline for Advance Tax in this F.Y is 15th March. Are you wondering about your Advance Tax Liability?- Anyone with a Tax Liability of more than INR 10,000 has to pay Advance Tax… so pay your Advance Tax in Advance!!

Cheaper Fuel Prices- A Possibility?

Global oil prices declined by 30% on 9th of March, 2020!

International oil prices have been highly volatile. In 2018, India imported 217.08 MMT of crude oil amounting to $114.5 billion while the Domestic production was 34.2 MT.

Taxes on petroleum & petroleum products are an important source of revenue for both the Union government and State Government.

Meeting budgetary targets… The fall in crude oil prices means lower tax revenue for the government at a time it is working hard to meet budgetary targets.

Government might tinker with excise collections… Crude oil prices fell by 30%. The growth rate of tax collection has been really slow. A few states have already increased VAT rates on petrol and diesel. 

Fuel retailers might not be able to reduce prices… This will be a direct impact of an increase in excise duty on petrol & diesel prices. This will limit the extent to which the consumers will benefit from low crude oil prices.

There is a tendency that the Government might hike the current tax rates to meet tax revenue targets. As a result, consumers might not get the entire benefits of low crude prices.

But will the government ever pass on the benefits to the consumer?

No matter what the Government decides, the likelihood of consumers benefiting from the same is really low unless the oil prices stabilize.

Byte of the Day

“… ESOPs should be taxed only when an employee has realized a benefit with regard to the same…”

                                                – Kunal Bahl, chief executive of Snapdeal